From John Davies
Executive Chairman of alternative lender Just Cashflow.
The sudden arrival of COVID-19 has changed the world we live in and SMEs have had to deal with unprecedented problems such as having to shut up shop with virtually all income disappearing overnight. As someone with four decades of experience of running businesses or helping them to invest and grow I keep getting asked about what the impact of the Covid-19 crisis is going to have on UK SMEs.
The Government has stepped in with a range of support measures such as the Coronavirus Interruption Business Loan Scheme (CIBLS) and the Bounce Bank Loan Scheme (BBLS). Additionally, VAT payments between 20th March and 30th June were able to be deferred – providing SMEs with some valuable breathing space.
Now attention is rapidly shifting to what the post Covid-19 world is going to look like and how these changes will impact SMEs that have a vital role to play in the economic recovery.
I want to focus on one thing that will never change and is vital to any businesses’ success – cash flow.
Let me take you back some 35 years. I clearly remember being enrolled on a course for financial directors titled ‘Cash is King’. I sat there, wet behind the ears, listening eagerly to the Professor carrying out an incredible educational course that showed me the importance of cash to a business. At the very start he announced three important lessons for the group.
1. Cash is King
2. Cash is always King
3. If in doubt refer to lessons 1) and 2)
If there’s no cash flow, it doesn’t matter how profitable you are, you will go out of business. It was a lesson I have never forgotten and the premise on which Just Cashflow was formed.